Binding Child Support Agreements are written agreements between parents or carers which cover child support arrangements. They were implemented to allow parents flexibility to make different arrangements concerning the payment of child support and other child-related costs whilst still providing a high level of certainty for the payee and payer parents.
The purpose of child support payments is to ensure that children receive regular periodic financial support from their parents to meet their usual day-to-day needs.
Both parties must obtain separate and independent legal advice prior to entering into a Binding Child Support Agreement, and after an Agreement has been entered into which is properly drawn, they are extremely difficult to set aside. For this reason, a solicitor must provide advice as to the advantages and disadvantages of entering into an Agreement of this nature and the effect of the Agreement on a party’s rights.
There are several advantages of entering into a Binding Child Support Agreement. Firstly, a Binding Child Support Agreement does not have to comply with the formula for calculating child support as set out in the Child Support (Assessment) Act 1989 (“the Act”). It is at the parents’ discretion as to whether they agree to one party (typically the higher income earner) paying a lower or higher rate of periodic child support to the other parent.
Parties who have agreed that no child support is payable can enter into a Binding Child Support Agreement to fix a nil amount of periodic child support payable. This will protect both parties from having to pay child support down the track if one party changes their mind.
These formalised agreements set out the terms upon which parties have agreed to provide financial support for their children into the future. Parties may agree to pay child support periodically, in a lump sum, or for payments to be made directly to a third party, (eg. school related expenses, extra-curricular activities, medical or dental expenses and health insurance premiums). The Agreement can document whether a parent is responsible for paying 100% of the cost of a specific expense or whether the cost is to be shared between the parties. Typically, a Binding Child Support Agreement will operate until the child reaches 18 years of age or finishes their secondary education if this occurs later.
A Binding Child Support Agreement can also take into account many variables such as fluctuating incomes, CPI changes as well as variations to care arrangements for the children. There is flexibility when it comes to safeguarding each party for future events which may impact upon their ability to pay or receive child support.
A Binding Child Support Agreement can be registered with the Child Support Agency and sets out binding and enforceable obligations. As a result, it can be difficult to resile from its terms unless a Court uses its discretion to have the agreement set aside which can be a costly and drawn-out process.
This may be disadvantageous for parties who face detrimental changes in their circumstances after the Agreement has been entered into.
It is not the intention of the Act that Binding Child Support Agreements should be set aside easily and the criteria for setting aside such an agreement is strict. Ultimately, the Court may refuse to set aside a Binding Child Support Agreement, even in cases where exceptional circumstances exist. It is important that the parties consider matters which may arise in the future that could have an adverse impact on their ability to cover their child support obligations prior to entering into the Agreement.
Ultimately, there are pros and cons of entering into a Binding Child Support Agreement and each party must receive independent legal advice before entering into an Agreement of this nature. Careful thought and planning should underpin a Binding Child Support Agreement and at Vic Rajah Family Lawyers we have expertise in drafting and providing advice to clients who intend to enter into a Binding Child Support Agreement.